TY  - JOUR
AU  - Fair,Ray C.
TI  - Estimated Effects of Relative Prices on Trade Shares
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 696
PY  - 1981
Y2  - June 1981
UR  - http://www.nber.org/papers/w0696
L1  - http://www.nber.org/papers/w0696.pdf
N1  - Author contact info:
Ray C. Fair
Cowles Foundation
P.O. Box 208281
Yale University
New Haven, CT  06520-8281
E-Mail: ray.fair@yale.edu
AB  - Estimated effects of relative prices on trade shares are presented in this paper for 64 countries. The equations are estimated using pooled time series, cross section data under the assumption that the error term is serially correlated across time and heteroskedastic across countries. The results strongly indicate that relative prices have an important effect on trade shares. The sensitivity of the properties of the multicountry model in Fair (1981a) to the endogenous treatment of trade shares is also examined. The addition of the trade share equations to the model has noticeable effects on the properties of the model regarding the effects of a depreciation. The sensitivity of trade shares to relative prices is an important channel in this version of the model through which a country's price of exports affects the demand for its exports.
ER  -